Defining the Insurance Customer by Ed Morrow, CLU, ChFC, CFP, RFC

A popular insurance magazine recently described CRM (Customer Relationship Management) software applications as if the only person who might have a customer or client relationship worth managing would be an insurance home office seeking to extend its "up close and personal" relationships with policy owners, with whom it seeks to expand its data mining efforts to generate more sales - hopefully direct with the customer.

A previous article in the same publication had reported that CRM, which is an automated process for improving business relationships, is now a "Dirty Word" in the Insurance Industry. Despite major investments in both hardware and software, CRM was not producing a flow of applications for new coverage. Therefore, CRM must be a failure.

Not so! It only appears to be the case because the IT folks in the home offices of insurance companies have totally misunderstood the most important issues.

First of all, most insurance companies do not understand who their customer really is. They think that the policy owner is their customer. They believe that this person, thousands of miles from their head office, actually thought so much of their company that they bought an insurance policy. Well, that may be true for the direct marketers - but not so for most of the policies! Most policies that have consequential premiums and that stay on the books, are purchased by customers from individual agents and advisors.

Moreover, insurance, especially life insurance, annuities, disability and long term care, is sold as part of an advisory process, not bought on a consumer impulse or the initiative of a call center telemarketer. And the sale is not made by the home office, or by the very expensive TV commercials, or by the display ads in consumer magazines such as Time, Money, and Cosmopolitan. It is sold by agents and advisors, to clients with whom they have built relationships. This is the "R" in Relationship Marketing that has been missing in the home office installations.

This disconnect is at the heart of the reason CRM has not worked for insurance companies. They have tried to use computer technology to bypass the professional and often personal relationships between the agent/advisor and the client. Once again, it appears that many home offices feel they can manage these relationships without the people who created them.

When will they learn? Other than for the direct marketers, the customer of the insurance company is the agent and advisor who sells, services and keeps in force the policies that the home office underwrites and invests.

Do insurance companies really treat their agents and advisor as their valued clients or customers? Are they loyal to them? Do they defend their interests? Well, some do - to an extent. And others do not - to a very great extent!

Are not many compliance officers viewed by agents as "business prevention" departments?

Have not most companies dismantled their training and advanced underwriting departments?

Are not agent calls for service and support often met with voice mail that "Your call is very important to us... but we're not taking calls right now?"

Some companies have even exerted their control through local computers, by making the agents' desktop their property. They own the software and hardware used by the agent to communicate with clients and make sales. This is an implied threat, "Leave us and we'll confiscate your computer and all your contact information!"

The true relationship that should be addressed by the powerful technology of CRM is the bond between the agent/advisor and the client. Notice that I used the word "client" rather than "customer." To a direct marketing insurance company a policy owner is viewed and treated as a "customer." A customer someone to whom you sell another unit to, or perhaps try to exploit some yet-undiscovered and unfulfilled need.

To a professional agent/advisor the policy owner is a "client" who normally owns insurance with several companies - group coverage, P&C insurance, previously purchased insurance policies and also new coverage, some of which might be placed with the agent's primary carrier.

The professional agent/advisor knows that no single insurance company writes all of the best contracts. Never has, never will. To whom should the agent/advisor owe his or her loyalty - the client or the company? Well, you can ask any of the professional societies (MDRT, NAIFA, IARFC, SFSP, FPA, AICPA) and they will all agree - the loyalty and responsibility is first due to the client.

That tells us how CRM should work - between the agent/advisor and the client or prospective client. This means that the software and data files to drive the CRM system must reside on the local computer of the agent/advisor - not belong to some faceless home office thousands of miles away. It should be operated by the advisor and local staff who can make the customizations required to adjust to each community and the way each agent/advisor practices.

Letters and cards should be sent on the agent/advisor's stationery - and personally signed. The topics should include items of local interest, personal concerns and have a warm, caring touch. So much for main-frame computers in the head office or all the warm fuzzy concern of the porn infected Internet.

CRM administered at the local level is a powerful prospecting tool because it generates that best of all leads - the referral. It does this by enhancing the image of the agent/advisor and improving the service that is delivered - locally.

A good CRM system processes newsletters, birthday and anniversary greetings. It sends mid-year and year-end planning memos. It prompts for periodic calls and review visits. It manages the appointment calendars and schedules planning and service tasks.

CRM must also be portable - to the agent/advisor's laptop, home system and PDA. The data contained in the successful CRM system must belong to the professional - not to the home office. Yes, this also means that when a home office forgets to treat the agent as valued customer that the data base and history of contacts and services remains with its creator - the agent/advisor. These clients will not be reassigned to some regional office or an agency manager's nephew who is just trying out the business.

Does CRM work for financial advisors and agents? You bet! Several thousand users of the Text Library System (www.TextLibrarySystem.com) will attest to its effectiveness. In the hands of Text Library System, CRM strengthens the bonds and secures the referrals that flow when the client truly has a "Top of Mind Awareness" that his or her financial interests are being well served by a caring professional advisor.

CRM is alive and well! Furthermore, it will flourish as long as there are caring and professional advisors - and a lot longer than some of the insurance conglomerates that believe they own the policy owner relationship.